Industry Hurting Despite Givebacks, Steel Locals Told

February 01, 1985|Call Washington Bureau

Although more than half a billion dollars in union wage and benefit concessions two years ago helped to make a bad year better than it would have been, recession still plagues the domestic steel industry, some 350 local presidents of the United Steelworkers of America heard yesterday.

The local presidents, along with 100 USW observers, met in the nation's capital yesterday to exchange information on the status of the steel industry and to "stay close together," according to Lynn Williams, president of the USW.

"Obviously the whole industry has been in a critical stance and continues to be," Williams said. "It's important for us to meet frequently and to discuss and exchange information."

In March 1983, the USW signed agreements with seven steel companies in which wage levels were reduced approximately 10.4 percent and certain vacation and holiday benefits were cut back. The wage reductions began to be restored on Feb. 1, 1984, and should be fully restored by Feb. 4, 1986.

A major purpose of the reductions was to provide the steel companies with capital for equipment improvements and modernization.

The local presidents learned yesterday that capital spending in the seven companies in 1983 totaled $1.5 billion - three times the amount the companies received in labor cost savings, according to the USW research department.

The research report singled out Bethlehem Steel for an "unusual method" of financing its new casters at Burns Harbor and Sparrows Point. An owner- trust, consisting of caster manufacturing companies, will build and own the casters, and Bethlehem will lease the facilities from the owner-trust. Future cost reductions provided by the new casters (which cost a total of $540 million) are expected to be greater than the company's lease payments.

However, the USW report cautioned that a lack of substantial investment at many steel company locations concerns the union and is a "major flaw" in the industry's drive for modernization.

"While the profit picture in the first nine months of 1984 is encouraging, the steel industry is still not out of the recession which started in 1982," the report said. "By any objective measure, the earnings of the companies with profits are minimal, and the second- and third-largest companies in the industry - Bethlehem and LTV - continued to operate at a loss."

The current USW contract expires in August of next year. Williams yesterday named a task force to begin to study contract ratification issues. Ed O'Brien, president of Bethlehem Steel Local 2598, will serve on the task force.

O'Brien yesterday predicted that the upcoming contract negotiations would be difficult because of the continued depressed state of the industry.

"We have a very long road to haul," he said. "I'm anxious to hear what my members have to say."

Pete DePietro, president of Local 2600, and Emilio Curzi, president of Local 2599, praised their leadership for the information exchange.

"The new leadership seems to be more open and interested in sharing with us," Curzi said. "In the past, that wasn't always so."

The local presidents also heard a report yesterday on the Reagan administration's efforts to curb steel imports through voluntary restraint agreements.

The USW last year criticized the administration's approach, saying it did not provide enough relief from imports which have soared to 26 percent of the domestic market.

"We're deeply interested in whether this program will work," Williams said yesterday. "It certainly should be of some assistance. The big question is how much? Our first approach will be to watch it."

DePietro added, "We're sitting back and waiting to see. If Reagan is right, we'll say so."

The basic steel conference was to end today with a separate meeting of mini-mill labor leaders.